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The report says the poorest people in the UK are "cut off from mainstream banking"

Much more must be done to help the UK's poorest families tackle problem debt, a Conservative-leaning think tank says.

The Centre for Social Justice, which helped shape the 2010 Tory manifesto, says the average UK household has debts of £54,000, including mortgages - nearly twice the level of a decade ago.

It says the poorest 10% of households have debts more than four times their income and need more affordable credit.

The government said it was making affordable credit more accessible.

Financial education

The Maxed Out report, led by former Labour work and pensions minister Chris Pond, says the average debt repayments of people in the poorest 10% of households were nearly half of their gross monthly income.

'It was like living in prison'

John Smith, 66, and his wife Donna, 51, from north Norfolk, told BBC Radio 4's Today programme about their battle with debt.

"It was terrible - we used to hide letters. To my shame we used to get my three children to answer the phone calls and pretend we weren't there, or just not answer the phone.

"It was like living in prison, we didn't want to go out, didn't socialise, we took ourselves out of society. We were frightened to go out in case someone pounced on us for money.

"We used to argue all the time, or the other extreme, not talk to each other.

"We lost our home, it was repossessed... we were basically left with the clothes we had.

"It wasn't about budgeting. It was the finance companies - they keep pressuring you to take out loans. It was the ability to say: 'No, I don't want that, it's not good for us.'"

But the authors say they have avoided the easy assumption of blaming individual responsibility.

Nor were payday lenders, the housing bubble or the banking crash to blame, they say.

Centre for Social Justice director Christian Guy said: "Years of increased borrowing, rising living costs and struggling to save has forced many families into a debt trap that is proving very difficult to escape.

"Problem debt can have a corrosive impact on people and families."

BBC home affairs editor Mark Easton said the poorest people could often access banking and credit only at a premium, with onerous terms making it more likely they would go overdrawn and suffer penalty charges.

Mr Guy said the poorest people in the UK were "cut off from mainstream banking and have no choice now but to turn to loan sharks and high-cost lenders".

The report says payday lenders have increased business from £900m in 2008/2009 to more than £2bn in 2011/2012.

And it also identifies a lack of financial education, saying studies suggest two-fifths of young people are unable to differentiate between being overdrawn or in credit on a bank statement.

It says more than 26,000 UK households have been accepted by councils as homeless in the past five years because of mortgage and rent arrears.

'Tough times'

Mr Pond said that "with falling real incomes and increasing costs of basic essentials, many, especially the most vulnerable, are sliding further into problem debt".

He said the costs to those affected, in stress, hardship and relationship breakdown was "immense", while lost employment and productivity also cost the nation.

Matt Barlow, chief executive of debt counselling charity Christians Against Poverty, said the report echoed cases it comes across every day and said it had opened 16 new debt centres across the UK in the past month.

"The average income of our clients is around £12,000 and you can imagine in that circumstance it's very easy to reach a crisis," he said.

A spokesman for the Treasury said the government's plan - growing the economy, lowering the deficit and inflation and creating jobs - was the only sustainable way to raise living standards.

"We appreciate that times remain tough for many people so wherever possible we have found the money to freeze fuel duty, freeze council tax and take 2.7m people out of tax by increasing the tax free personal allowance," he said.

Changes to give more people access to affordable, short term credit included expanding credit unions to save consumers up to £1bn in loan interest repayments and working with councils and the Money Advice Service to ensure people have the right budgeting advice, he added.